MyPoints’ Sellers AND Buyers Give Themselves Bonuses

April 13, 2006 · 0 comments

The wheeling and dealing that goes on behind the scenes of one business buying another business is just fascinating. Did a little digging and found out some interesting info about this week’s MyPoints sale.’s former owner, United Air Lines, put a nice little clause in their bankruptcy plan — they intended to sell MyPoints (which we knew about last September), and when they did, they would give “key employees” a bonus. It’s called a KERP (Key Employee Retention Program, which I guess is another way to say, it’s an incentive to keep MyPoints running by giving their VIPs a reason to stay until the company was sold). It was a nice little plan, too — these execs would get a bonus equal to 50% of their salary when MyPoints sold (they’d get half of that at the time of sale and half if they stuck around for 6 months afterward). Plus, if they were terminated after the sale, they’d get another 50% of their salary. THEN, they got another bonus based on MyPoints’ selling price — up to 5% of the value of the business in excess of $11M up to $51M…in other words, since they sold MyPoints for $56M, those execs got somewhere around 5% of $45 million ($56M-$11M). Nice! This bonus would be split among 7 top execs at MyPoints. ** Update, 4/15: Douglas Hacker, a senior VP at United Airlines, decided to step down after completing the sale of MyPoints. In addition to other compensation, he’ll get a $2.1 million bonus for selling MyPoints. More info here.
Soooo…MyPoints execs made out pretty good on the sale. But they weren’t the only ones. MyPoints’ BUYERS got a nice little bonus, too.
In United Online’s 8-K filing on March 30, it was stated that on March 27 (about two weeks before they bought MyPoints), their board of directors adopted an acquisition bonus plan that would give seven of THEIR execs a nice little bonus if United Online purchased any companies that helped the company diversify (or if they purchased any of several “target” companies that they didn’t spell out in the document). They would get 140 to 160% of their salary as a bonus, depending on who they were and what the target was, and 10 to 30% of their salary as an acquisition bonus, depending on who they were.
So, everyone involved in the sale, both the sellers of MyPoints and their buyers, gave themselves a bonus for a job well done.
Interesting, I thought.
Read for more info here, here, and here.

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